Millennials Cut the Cord on ESPN

Oct 21, 2015

RUSH: ESPN is in trouble economically, financially. ESPN just announced that they’re gonna have to cut a minimum of 350 jobs. And the reason why is subscribers are abandoning cable. Many people do not understand how all of this works, the cable bundle. I mean, you understand that you have to pay a minimum amount per month to get a bunch of channels, the vast majority of which you never watch, but the channels you want are in that bundle, and you have to pay for the bundle.

So let’s say you want your local stations, you want ESPN, maybe HBO. Fine. You’ve gotta buy 25 or 30 or maybe other channels that you never watch. Now, here’s the thing about that. In a free market, these networks with no audience wouldn’t survive. If you have network programming that nobody watches, then there won’t be any ratings and you won’t be able to sell any advertising and you won’t be able to operate. If, however, the cable companies collect X-amount per subscriber as though they are viewers and then pay that to the network, then the network can stay alive and viable even though nobody may be watching it.

ESPN gets six dollars per cable subscriber every month. That is ESPN’s gravy train. And when cord cutting begins, when people eliminate cable from their lives, then the number of people paying for the bundle, out of which ESPN gets six bucks per customer, that starts dwindling away, and ESPN’s income dwindles away, and it doesn’t matter how many viewers they have or not. This is the point, with the cable bundle it doesn’t matter how many viewers a network has. In ESPN’s case, it doesn’t matter, because they’re gonna get six dollars for every household that has ESPN in its cable package.

The interesting thing is 3.2 million people have cut the cord so far, 3.2 million people have cut their cable subscription, and that means that a good percentage of that 3.2 million people are no longer funding ESPN at six dollars a month. They are leaving cable for a bunch of market reasons. Many of them are Millennials, and they just simply don’t want to pay for channels. They don’t have the money. Young people can’t get jobs; they don’t have the money. They don’t want to pay for things they don’t watch.

They’d rather take the money they have and a la carte their way via streaming or whatever and watch it on their device. And maybe if they have AirPlay, project it onto a TV or something, but they don’t want to pay cable. Well, 3.2 million people, many of them probably not even sports fans, that’s gonna add up to a serious chunk of change. That’s $250 million a year for ESPN. ESPN’s in close to a hundred million homes. But if they lose 3.2 million subscribers, that’s a loss of $250 million a year, and that’s why they are cutting 350 jobs.

But here is the piece de resistance. This is what everyone needs to know. Bundled cable subscriptions serve as the foundation for Hollywood to own pop culture. John Nolte at Breitbart makes this point extremely well today. Hollywood does not have to generate audience in order to generate income. All they have to do is secure networks being carried by cable in a basic tier, or maybe next tier up, and they get funded by customers who never watch the network, or very few do, because they’re not buying for these obscure channels that are all left left-wing rubbish, many of them are.

That’s how they remain viable, that’s how they remain in operation, without anybody watching them, people paying the cable channels, the cable companies. Every network gets a certain amount of money per subscriber. ESPN’s the top at six bucks. Not every channel gets that. Some get 50 cents, 75 cents, what have you. But the scam of bundled cable is the foundation of Hollywood’s money and cultural power.

Look at it this way. If Hollywood was not able to force people to pay for networks and programming they never watch — MSNBC has no audience. MSNBC could not stay on the air if it weren’t for cable bundles. CNN, ditto, folks. They don’t have enough audience to be viable with just their audience. They couldn’t survive without cable and these subscriber percentages that they collect.

The same thing with Comedy Central. Nobody watches Comedy Central. Not enough people watch Comedy Central to support it via advertising. Ditto MTV. But they all get a percentage of everything you pay monthly to cable to sustain them. And Millennials are leading the way, unknowing about this impact, in taking away some of that staying power.